|By Scott Wyman, South Florida
Sun-SentinelMcClatchy-Tribune Regional News
Apr. 15, 2008 - Broward County will have to pledge up to $21 million a year in public money if officials want to build a luxury hotel to boost business at the convention center.
According to a financial analysis given to county commissioners, a fifth of the taxes that tourists now pay to stay at area hotels would have to go to the new project. All revenue collected from events at the convention center also would have to be spent on constructing the hotel.
Even with the pledge of public money, prospects remain cloudy that the $460 million deal between the county and Hilton Hotels can become reality. Developers have a May 1 deadline to complete financing details, but are asking commissioners for an extension so the county can obtain a legal opinion from the state attorney general on whether they can tap the tourism tax money.
The financial analysts told commissioners that the project would be almost unfeasible without the pledge. A $76 million hole in financing would have to be plugged, and the cost of borrowing money to pay for construction would skyrocket. Commissioners, who will discuss the project today, expressed increasing skepticism Monday about whether it is viable.
"I have not made up my mind on the new financing arrangement and am still debating the merits," Commissioner Ken Keechl said. "I would still like to see a convention center hotel and believe it would be good for the community, but it is not something we necessarily need."
The county chose Hilton over the rival Marriott chain last November to build the 1,000-room hotel next to the convention center, just off 17th Street in Fort Lauderdale.
Tourism executives have long sought an on-site hotel as a way to boost convention business. In selecting Hilton's 27-story proposal, commissioners vowed to pursue the project only as long as no property tax money was required.
Under the proposal that county negotiators have crafted with Hilton, tourism tax dollars and convention center revenue would be used to pay construction loans only if the hotel's revenue and other reserves prove inadequate. The financial analysis team, which includes JPMorgan and PiperJaffray, say county support is vital to obtain investment ratings higher than junk bond status.
The financial analysts said in a report to commissioners that Broward County remains one of the strongest markets in the nation for a convention center hotel. They estimate an average of 22 events and a total of 44,000 attendees yearly if a hotel is built next door and planners can block sets of rooms for the conventions.
The proposal from county negotiators and Hilton would have officials commit $8.3 million a year in tourism tax money and $12.8 million a year in convention center revenue to the project through 2041. If financed solely with tourism tax money, interest rates for construction would climb.
County attorneys earlier advised commissioners that the use of tourism taxes for the hotel is legally shaky. The county has been exploring using those funds to pay for parts of the hotel related to the convention center, such as a bridge between the two buildings. It's that approach the county is seeking advice on from state Attorney General Bill McCollum.
The project has deeply split the County Commission since November, surviving on 5-4 votes. Keechl and Commissioner Suzanne Gunzburger have been supportive and could be key to what happens next.
Gunzburger said she dislikes using convention center revenue, questioning how repairs or renovations would then be financed. "If the tourism development tax is not enough, then I'm afraid our time has come and gone," Gunzburger said.
But Commissioner Stacy Ritter is urging her colleagues to remain committed to the hotel. The idea has fallen apart repeatedly since the convention center opened in the late 1980s.
"The path to these type of projects is not always a straight road, but that doesn't mean you don't get there at the end of the day," Ritter said.
Scott Wyman can be reached at firstname.lastname@example.org or 954-356-4511.
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